Nishimura & Partners and Tokiwa Sogo Law Offices said Wednesday they have agreed to merge Jan. 1.
The merger will create Japan's biggest law firm, boasting 168 lawyers.
The deal is aimed at addressing corporate bankruptcies and rehabilitation procedures more quickly amid moves to accelerate bad-loan disposals by banks, they said.
The name of the merged firm has yet to be decided, the firms said.
Nishimura & Partners, founded in 1966, currently ranks third nationally, incorporating some 140 lawyers. The firm is known for providing legal services related to the bankruptcies of financial institutions and those related to international business.
Tokiwa Sogo was set up in 1976. It specializes in corporate bankruptcies.